Springtime for Merkel and Germany

For the first time since its founding in 1871, Germany seems to be in a position to achieve its long-standing objective of bringing much of Europe under its control, through peaceful means this time around.

True, some people—for example, Greeks and the Italians—are resisting the new form of German geoeconomic hegemony in Europe, achieved through a new form of French collaboration. But the pundits are disparaging these Mediterranean people as a lazy bunch of beach dwellers and party goers on the periphery of Europe who have yet to acquaint themselves with the basics of twenty-first-century financial literacy.

Indeed, much of the prevailing media discourse views the euro-zone debate as being over economic policies—or, as New York Times columnist David Brooks has suggested, a struggle between the “effort-reward formula that undergirds capitalism” (Germany and the United States) and those Europeans who have yet to embrace the “values, habits and social contract upon which the entire prosperity of the West is based.”

Brooks ridicules the notion that the Germans are “besotted with some semi-senile superstition about rampant inflation.” But his disclaimer ran on the same day that the front page of the Times carried a report from Germany headlined, “German Fears About Inflation Stall Bold Steps in Debt Crisis.” Brooks seems to think there is some kind of software that provides nations with instructions on how to do capitalism.

This is the same kind of economic determinism promoted by the intellectual allies of the Davos Men, who since the end of the Cold War have been insisting that a universal ideology of economic liberalism would usher in the victory of capitalism here, there and everywhere.

In reality, there are many versions of capitalism, from Ayn Rand’s ideal of a free market to China’s “state capitalism.” These generally are products of unique historical conditions and cultural traditions. That Germany and the United States have experienced enormous economic growth in the post-World War II period has to do with the power exerted by their values and their histories as national communities.

The Anglo-Saxon form of capitalism practiced in the United States, with its emphasis on individual initiative and unregulated markets, is quite different from the model of “social capitalism” found in Germany. This version assumes close cooperation among governments, business and labor unions. It may be difficult to compel Greeks and Italians to play by the rules of thrift and social responsibility that underpin the German model, but, then, no one could force Germans to practice America’s rowdy and individualistic form of capitalism, either.

That Germany will likely come out of the euro-zone crisis in “win-win” position is testimony to the success of its model and the skill with which its political and economic elites have been pursuing their nation’s strategic interests. After successfully unifying the divided nation following the collapse of the Berlin Wall, Germany agreed to bolster the European Union and create a euro zone as part of an effort to allay the fears of its former French and British antagonists. But that also provided abundant opportunities for its financial institutions.

On one hand, Germany could dominate the euro zone, and by extension the entire EU, by dictating fiscal and monetary policies that favor its interests. Or it could form the core of a small and more cohesive group of economies—including France, Holland, Belgium, and former communist-bloc countries in Eastern and Central Europe—that would become the economic engine of Europe.

Either way, the rise of Germany as the leading continental power is reviving old and new political fears among Europeans. In an interesting political twist, right-wing nationalist parties in France and Holland, as well as elsewhere in Europe, have emerged as the most vocal opponents of the idea of a German-led EU (in addition to their strident opposition to Muslim immigration).

These right-wing parties get much of their electoral support from working-class voters who in the past tended to back the socialist and communist parties. Thus, what many now see as a debate over economic policies could produce a powerful nationalist backlash. Merkel’s Germany is not the Fourth Reich, but it is positioned increasingly to impose its will on its neighbors. And that inevitably generates fears.

Leon Hadar, a Washington-based journalist and global affairs analyst, is the author of Sandstorm: Policy Failure in the Middle East (Palgrave Macmillan, 2005).